“Paid product endorsements are meaningless. I want to learn about the product from experts who are advocating for it – not just some random person who happens to have a job that makes them well-known.”
— Consumer panel participant, ExpertVoice, May 2018.
The next time you see a celebrity spokesperson speaking about a product or a service … don’t think much of it.
Chances are, the celebrity isn’t doing a whole lot to increase a company’s sales or enhance its brand image.
We have affirmation of this trend in a report issued in June 2018 by marketing firm ExpertVoice, which recently investigated a Census-weighted audience of ~500 U.S. consumers on the issue of who consumers trust for recommendations on what to buy.
The findings confirm that while celebrity endorsements do raise awareness, typically it fails to move the needle in terms of sales. In fact, just ~4% of the participants in the ExpertVoice research study reported that they trust celebrity endorsements. (And even that percentage is juiced by professional athletes who are more influential than other celebrities.)
As for the reason for the lack of trust, more than half of the respondents noted that their greatest concern is the monetary compensation given to the people from the brands they’re endorsing. Consumers are wise to the practice – and they reject the notion that the endorser has anything other than self-dealing in mind.
By way of comparison, here are how celebrities stack up against others when it comes to influencing consumer purchases:
Trust recommendations from friends/family members: ~83% of respondents
… from a professional expert (e.g., instructor or coach): ~54%
… from a co-worker: ~52%
… from a retail salesperson: ~42%
… from a professional athlete: ~6%
… from any other kind of celebrity: ~2%
A big takeaway from the ExpertVoice research is that more people are influenced by individuals who are making recommendations based on actual experiences with the products in question. Moreover, if it’s people they know they know personally, they’re even likelier to be swayed by their opinions.
In a crowded marketplace full of many purchase choices, consumers are looking for trusted recommendations. That means something a lot more authentic than a celebrity endorser. Considering the amount of money companies and brands have historically had to pony up for celebrity pitches, it seems an opportune time for marketers to be looking at alternative methods to influence their audiences.
Click here for more information regarding the ExpertVoice research findings.
Over the past five years or so, one of the key tactics of branding has been convincing “market influencers” to promote products and services through endorsements rather than relying on traditional advertising. Not only does “influencer marketing” save on paid advertising costs, presumably the brand promotion appears more “genuine” to consumers of the information.
At least that’s how it’s supposed to work according to the textbook theory.
But let’s dissect this a bit.
Some of the earliest forms of “influencer marketing” were the so-called “mommy bloggers” who were stars of the social media world not so long ago. The blogs run by these people were viewed as authentic portrayals of motherhood with all of its attendant joys and stresses.
Mommy blogs like Heather Armstrong’s Dooce.com, Jenny Lawson’s The Bloggess and Glennon Doyle’s Momastery once held sway with stratospheric monthly traffic exceeding the million page level. But once that volume of engagement happened, it didn’t take long for many bloggers to begin to command big dollars in exchange for product mentions and brand endorsements.
Various meetings and workshops were organized featuring these bloggers and other stars of the social media world – moms, style gurus, interior decorators, fashionistas and the like – providing a forum for consumer product and service companies to interact with these social movers-and-shakers and pitch their products in hopes of positive mentions.
Eager to jump on the bandwagon of this phenomenon, several years ago I recall one of my corporate clients attending their first conference of bloggers — in this case ones who specialize in home décor and remodeling topics.
To put it mildly, our client team was shocked at the “bazaar-like” atmosphere they encountered, with bloggers thrusting tariff schedules in front of their faces listing prices for getting brand and product mentions based on varying levels of “attention” – photos, headline story treatment and the like.
Even more eyebrow-raising were the price tags attached to these purportedly “authentic” endorsements – often running into the thousands of dollars.
Quite the gravy train, it turns out.
It would be nice to report that when the bubble burst on these types of blogs, it was because their readers wised up to what was actually happening. But the reality is a little less “momentous.” Simply put, blogging on the whole has stagnated as audiences have moved to other platforms. The rise of “mobile-everything” means that consumers are spending less time and attention on reading long-form blog posts. Instead, they’re interacting more with photos and related short, pithy descriptions.
Think Facebook and Instagram.
Along with that shift, product endorsements have reverted back to something more akin to what it was like before the time of social media – product promotion that feels like product promotion.
Look at blogging sites today, and often they feel more like classified advertising – more transactional and less discursive. Photos and video clips are the “main event,” and the writing appears to exist almost exclusively to “sell stuff.”
Many consumers see through it all … and it seems as though they’ve come to terms with the bloggers and their shtick. With a wink and a nudge, most everyone now recognizes that bloggers are “on the take.” It’s a job – just as surely as the rest of us have our 8-to-5 jobs.
Still, it’s an acceptable tradeoff because in the process, useful information is being communicated; it’s just more transactional in nature, like in the “old days.”
So where does this put influencer marketing today? It’s out there. It still has resonance. But people know the score, and few are being fooled any longer.
It’s certainly food for thought for marketers who are thinking that they can use influencer marketing to replace advertising.
It’s now been more than nine months since Amazon launched its social media platform Spark … and so far, it’s hardly sizzled.
In fact, it’s made barely a ripple in the market.
There are plenty of people who contend that the last thing the world needs is yet another social network. But others would like to see new alternatives to the recently beleaguered Facebook platform.
As for its trajectory, it looks as if Spark is following the former rather than the latter path. The question is, “Why?”
Very likely, the answer lies in Spark’s questionable underlying raison d’etre. Essentially, Spark is a social feed of photos and other images. That makes it similar to Instagram … sort of.
One difference between the two platforms is that Spark is open to exclusively to Amazon Prime members. That limits the potential number of Spark users pretty severely, right from the get-go. [It’s true that non-members can view Spark feeds — but they can’t post their own content. And what’s a social platform if you cannot interact with it? It isn’t one.]
Another difference with Instagram may be even more of a fundamental problem. The rationale for Spark is to focus on products that Amazon sells. Spark is directly “shoppable,” which differentiates it from Instagram and other social networks. It also makes it less like a true social network and more like a garden-variety e-commerce site.
In other words, rather than being an interesting and engaging social platform, Spark is boring. Informative – but boring.
It isn’t that Amazon/Spark allows brands themselves to post content there; posting privileges are granted only to people it dubs “enthusiasts” or “onsite associates.” Brands must seek out “regular people” [sic] who are members of Amazon Prime to post content on their behalf about their products.
And I’m sure that’s happening – along with varying levels and forms of compensation flowing to these supposed “enthusiasts” in return for the product plugs. But can anyone imagine less compelling content than what results from this kind of commercialized “AstroTurfing”? No wonder people are ignoring this social media platform.
Andrew Sandoval, a group director for media planning agency The Media Kitchen, summarizes Spark’s predicament by noting that lifestyle-focused people tend congregate on Instagram — a place that shows people living their lives through products. By contrast, “Amazon Spark is mostly just talking about your products, which is the hard-sell. Ultimately, the e-commerce social experience is a little too far from the social experience,” Sandoval opines.
Have you interfaced with Spark since its July 2017 launch? If so, do you see redeeming qualities about the platform that the rest of us might be missing? Please share your comments with other readers.
Based on new research, the time-honored “90-9-1 rule” may no longer be accurate.
The 90-9-1 rule states that for every 100 people active online, one person creates content … nine people respond to created content … and 90 are merely lurkers – consuming the information but not “engaging” with it at all.
But now we have a survey by ratings and reviews platform Clutch which suggests that the ratio may be changing. The Clutch survey finds that around 20% of online shoppers have written reviews for some of their purchases.
That finding would seem to indicate that more people are now involved in content engagement than before. Still, when just one in five shoppers are writing and posting customer reviews, it continues to represent only a distinct minority of the market.
So, the big question for brands and e-commerce providers is how to encourage a greater number of people to post reviews, since such feedback is cited so often as one of the most important considerations for people who are weighing their choices when purchasing a new product or service.
A few of the ways that businesses have attempted to increase participation in customer reviews include:
Make the review process as efficient as possible by requesting specific feedback through star ratings.
Provide additional rating options on product/service performance sub-categories through quick guided questions.
Providing timely customer service – including resolving products with orders – can also increase the likelihood of garnering reviews that are positive rather than negative ones.
This last point is underscored by additional Clutch results which, when the survey asked why online shoppers write reviews, uncovered these reasons:
Was especially satisfied with the product or service: ~33%
Received an e-mail specifically requesting to leave feedback: ~23%
Was offered an incentive to leave feedback: ~5%
Was especially dissatisfied with the product or service: ~2%
For companies who might be concerned that negative feedback will be given lots of play, the 2% statistic above should come as some relief. And even if a negative review is published, the situation can often be rectified by reaching out to the reviewer and providing remedies to make things right, thereby “turning lemons into lemonade.”
After all, most consumers are pretty charitable if they sense that a company is making a good-faith effort to correct a perceived problem.
His reasons are a near-indictment of the company for losing the innovative spark that Yegge thinks was the key to Google’s success — and which now appears to be slipping away.
In a recently published blog post, Yegge lays out what he considers to be Google’s fundamental flaws today:
Google has gone deep into protection-and-preservation mode. “Gatekeeping and risk aversion at Google are the norm rather than the exception,” Yegge writes.
Google has gotten way more political than it should be as an organization. “Politics is a cumbersome process, and it slows you down and leads to execution problems,” Yegge contends.
Google is arrogant. “It has taken me years to understand that a company full of humble individuals can still be an arrogant company. Google has the arrogance of “we”, not the “I”.
Google has become competitor-focused rather than customer-focused. “Their new internal slogan — ‘Focus on the user and all else will follow’ – unfortunately, it’s just lip service,” Yegge maintains. “A slogan isn’t good enough. It takes real effort to set aside time regularly for every employee to interact with your customers. Instead, [Google] play[s] the dangerous but easier game of using competitor activity as a proxy for what customers really need.”
Yegge goes on to note that nearly all of Google’s portfolio of product launches over the past 10 years can be traced to “me-too copying” of competitor moves. He cites Google Home (Amazon Echo), Google+ (Facebook) and Google Cloud (AWS) as just three examples — none of them particularly impressive introductions on Google’s part.
Yegge sums it all up with this rather damning conclusion:
“In short, Google just isn’t a very inspiring place to work anymore. I love being fired up by my work, but Google had gradually beaten it out of me.”
It isn’t as if the company’s considerable positive attributes aren’t acknowledged – Yegge still views Google as “one of the very best places to work on Earth.”
It’s just that for creative engineers like him, the spark is no longer there.
Where have we seen these dynamics at play before? Microsoft and Yahoo come to mind.
These days, Facebook might be trending in that direction too, a bit.
It seems as though issues of “invincibility” have a tendency to creep in and color how companies view their place in the world, which can eventually lead to complacency and a loss of touch with customers. Ineffective company strategies follow.
That’s a progression every company should try mightily to avoid.
What are your thoughts on Steve Yegge’s characterization of Google? Is he on point? Or way wide of the mark? Please share your perspectives with other readers here.
As disruption wends its way through the retail marketplace, jewelers are the latest sector being upended.
In the world of retail, it makes total sense that e-commerce would be making certain sectors such as traditional bookstores a thing of the past. After all, the products they sell are identical to what’s available online — even down to the UPC barcode.
The only difference is a higher price tag – along with a few other impediments like store hours, the hassles of parking and the like.
But as time’s gone on, it’s become clear that the impact of e-commerce is affecting shopping behaviors in retail segments that might never have been thought to be susceptible.
Consider retail fine jewelry. If ever there was a segment where consumers could be expected to want to “see and feel” the merchandise prior to purchasing, it would seem to be this one.
However, a recent analysis by gem and jewelry industry specialist Polygon has found that the U.S. retail jewelry industry is reeling from the triple phenomenon of falling diamond prices, store closures and a liquidity crunch that has persisted since 2016.
Super-competitive pricing offered by online-only retailers and their foreign suppliers has put relentless pressure on gem prices at every step in the supply chain, it turns out. Profit margins have slipped badly as a result.
Consequently, an increasing number of jewelry businesses in the United States have found that economics of maintaining physical stores just aren’t working out. Since 2014. a raft of store closures has affected both independents and chain operations.
At the top of the supply chain, the biggest international producers of gems are responding to the industrywide pressures by cutting costs through mine closures, employee layoffs and assets sales. Probably the most prominent example of this is Anglo-American PLC, which laid off more than 85,000 workers at the beginning of this year, along with putting more than 60% of the company’s assets up for sale.
Par for the course, the relative bright spot in the overall picture is online jewelry sales. Online is taking up the slack of the other channels – but at lower sticker prices. Online retail sales of fine jewelry continue to grow in the high single-digits, even as the rest of the industry struggles mightily to maintain a business model that has become precarious in the new “online everything” world of retail.
I have my doubts that jewelry stores will disappear completely from the shopping malls, like we’ve seen happen with retailers of movies and music. But the days of a jewelry store outlet anchoring every major crossroads intersection at the shopping mall are probably history.
More information on the Polygon report can be found here.
It’s common knowledge by now that the data breach at credit reporting company Equifax earlier this year affected more than 140 million Americans. I don’t know about you personally, but in my immediate family, it’s running about 40% of us who have been impacted.
And as it turns out, the breach occurred because one of the biggest companies in the world — an enterprise that’s charged with collecting, holding and securing the sensitive personal and financial data of hundreds of millions of people — was woefully ill-prepared to protect any of it.
How ill-prepared? The more you dig around, the worse it appears.
Since my brother, Nelson Nones, works every day with data and systems security issues in his dealings with large multinational companies the world over, I asked him for his thoughts and perspectives on the Equifax situation.
What he reported back to me is a cautionary tale for anyone in business today – whether you’re working in a big or small company. Nelson’s comments are presented below:
Background … and What Happened
According to Wikipedia, “Equifax Inc. is a consumer credit reporting agency. Equifax collects and aggregates information on over 800 million individual consumers and more than 88 million businesses worldwide.”
Founded in 1899, Equifax is one of the largest credit risk assessment companies in the world. Last year it reported having more than 9,500 employees, turnover of $3.1 billion, and a net income of $488.1 million.
On September 8, 2017, Equifax announced a data breach potentially impacting 143 million U.S. consumers, plus anywhere from 400,000 to 44 million British residents. The breach was a theft carried out by unknown cyber-criminals between mid-May 2017 until July 29, 2017, which is when Equifax first discovered it.
It took another 4 days — until August 2, 2017 — for Equifax to engage a cybersecurity firm to investigate the breach.
Equifax has since confirmed that the cyber-criminals exploited a vulnerability of Apache Struts, which is an open-source model-view-controller (MVC) framework for developing web applications in the Java programming language.
The specific vulnerability, CVE-2017-5638, was disclosed by Apache in March 2017, but Equifax had not applied the patch for this vulnerability before the attack began in mid-May 2017.
The workaround recommended by Apache back in March consists of a mere 27 lines of code to implement a Servlet filter which would validate Content-Type and throw away requests with suspicious values not matching multipart/form-data. Without this workaround or the patch, it was possible to perform Remote Code Execution through a REST API using malicious Content-Type values.
Subsequently, on September 12, 2017, it was reported that a company “online portal designed to let Equifax employees in Argentina manage credit report disputes from consumers in that country was wide open, protected [sic] by perhaps the most easy-to-guess password combination ever: ‘admin/admin’ … anyone authenticated with the ‘admin/admin’ username and password could … add, modify or delete user accounts on the system.”
Existing user passwords were masked, but:
“… all one needed to do in order to view [a] password was to right-click on the employee’s profile page and select ‘view source’. A review of those accounts shows all employee passwords were the same as each user’s username. Worse still, each employee’s username appears to be nothing more than their last name, or a combination of their first initial and last name. In other words, if you knew an Equifax Argentina employee’s last name, you also could work out their password for this credit dispute portal quite easily.”
The reporter who broke this story contacted Equifax and was referred to their attorneys, who later confirmed that the Argentine portal “was disabled and that Equifax is investigating how this may have happened.”
The Immediate Impact on Equifax’s Business
In the wake of these revelations, Equifax shares fell sharply: 15% on September 8, 2017, reducing market capitalization (shareholder value) by $3.97 billion in a single trading day.
Over the next 5 trading days, shares fell another 24%, reducing shareholder value by another $5.4 billion.
What this means is that the cost of the breach, measured in shareholder value lost by the close of business on September 15, 2017 (6 business days), was $9.37 billion – which is equivalent to the entire economic output of the country of Norway over a similar time span.
This also works out to losses of $347 million per line of code that Equifax could have avoided had it deployed the Apache Struts workaround back in March 2017.
The company’s Chief Information Officer and Chief Security Officer also “retired” on September 15, 2017.
Multiple lawsuits have been filed against Equifax. The largest is seeking $70 billion in damages sustained by affected consumers. This is more than ten times the company’s assets in 2016, and nearly three times the company’s market capitalization just before the breach was announced.
The Long-Term Impact on Equifax’s Brand
This is yet to be determined … but it’s more than likely the company will never fully recover its reputation. (Just ask Target Corporation about this.)
Takeaway Points for Other Companies
If something like this could happen at Equifax — where securely keeping the private information of consumers is the lifeblood of the business — one can only imagine the thousands of organizations and millions of web applications out there which are just as vulnerable (if not as vital), and which could possibly destroy the entire enterprise if compromised.
At most of the companies I’ve worked with over the past decade, web application development and support takes a back seat in terms of budgets and oversight compared to so-called “core” systems like SAP ERP. That’s because the footprint of each web application is typically small compared to “core” systems.
Of necessity, due to budget and staffing constraints at the Corporate IT level, business units have haphazardly built out and deployed a proliferation of web applications — often “on the cheap” — to address specific and sundry tactical business needs.
I strongly suspect the Equifax portal for managing credit report disputes in Argentina — surely a backwater business unit within the greater Equifax organization — was one of those.
If I were a CIO or Chief Security Officer right now, I’d either have my head in the sand, or I’d be facing a choice. I could start identifying and combing through the dozens or hundreds of web applications currently running in my enterprise (each likely to be architecturally and operationally different from the others) to find and patch all the vulnerabilities. Or I could throw them all out, replacing them with a highly secure and centrally-maintainable web application platform — several of which have been developed, field-tested, and are readily available for use.
So, there you have it from someone who’s “in the arena” of risk management every day. To all the CEOs, CIOs and CROs out there, here’s your wakeup call: Equifax is the tip of the spear. It’s no longer a question of “if,” but “when” your company is going to be attacked.
And when that attack happens, what’s the likelihood you’ll be able to repel it?
… Or maybe it’ll be the perfect excuse to make an unforeseen “early retirement decision” and call it a day.
Update (9/25/17): And just like clockwork, another major corporation ‘fesses up to a major data breach — Deloitte — equally problematic for its customers.